Property Management Mock Exam #4
When considering on-site maintenance personnel, the property manager should
carefully study the minimum personnel requirements---Building maintenance should fit into an efficient and cost effective pattern.
Since display ads generally cost more, they
carry greater visual impact than classified ads.---Display ads offer graphics, elaborate design and may be a quarter page in size.
An owner purchases a unit in a building and receives fee simple ownership of it, as well as undivided interest in the common elements. This person owns a
condominium---A townhome owner owns land. A condo owner owns an undivided interest of the common areas with the other unit owners.
Maintenance tasks performed by outside laborers on a regular basis for a specified fee are
contract services---Many maintenance tasks can be performed more economically on a contract basis.
A neighborhood analysis for a subject office property will highlight transportation and parking facilities in the community, as well as
emphasize the prestige of address---A neighborhood analysis would also include economy, supply and demand, amenities and facilities.
In a large management organization, the general administration of the daily operation of a property is performed by the
field manager---The property supervisor takes care of general administration and directs the daily operation of the property.
One of the BEST reporting services to acquire a reliable financial report on commercial or industrial tenants would be
Dun and Bradstreet---Dun and Bradstreet is a credit reporting agency that publishes credit ratings for many corporate businesses.
The fact that a property manager must put the owner's interest above the property manager's own and act without self-interest is best expressed in which of the following fiduciary duties?
Loyalty---The manager is hired to represent the clients interest not their own.
Property #1 has a capitalization rate of 12% and property number #2 has a capitalization rate 14%. Both properties are comparable to each other and have a net operating income of $12,000 per year. Which of the following is TRUE?
Property #2 has a lower value than property #1.---When the capitalization rate goes up value comes down.
A tenant of which of the following properties normally uses a gross lease?
Apartment---A gross lease is most common in residential
Remedies are usually included in a cooperative's proprietary leases in the event an owner does NOT pay for an assessment or service contracted for. Which of the following statements is incorrect in the event of an owner's default of payment?
The ownership of each unit will revert to a fee simple title.---An owner in a cooperative owns stock not title to the property.
Categorization of market area for a center is relatively simple because the size of the market area served is reflected in the center's size. The neighborhood shopping center has
about 15 to 20 stores, and is anchored by a supermarket---about 15 to 20 stores, and is anchored by a supermarket - RIGHT
Residential tenants should be approached about renewing a lease
about three months before its expiration---The timing would allow the manager to consider the upcoming economic conditions and retain rent for cash flow.
The primary purpose of life safety and security technology is to
discover and promptly report an emergency---This provides for the management of the total physical protection of the tenants.
Because of rapid technological changes, industrial facilities run serious risks of loss through
functional obsolescence.---Functional obsolescence would be a design or outdated problem.
Rentable area of a floor is computed by measuring to the
inside finished surface of the dominant portion of the permanent outer building walls.---
In organizing a group of tenant wardens, the property manager will find that
leadership qualifications may be discovered by asking---By asking the manager may find that many tenants may have skills or training that would be critical in an emergency. A tenant might be a fire fighter.
When the property manager turns attention to emergency procedures, the manager should recognize that
lengthy written procedures should be condensed and published for building occupants---The procedures should be easy to understand by the tenants.
The owner of a cooperative owns
personal property.---The owner of a cooperative owns stock which is personal property.
Depreciation is divided into three categories: economic, functional, and
physical---Economic would be outside factors. Functional is outdated or design. Physical is broken.
An effective way to reduce crime and the effects of it is
promoting community watch programs---If an area is regularly patrolled it will deter crime
Industrial firms have been able to leave congested metropolitan areas as a result of
rapid emergence of the freight trucking industry---Due to the construction of interstate highways and expressways, trucking has emerged as a primary mover of goods.
Subsidized housing is managed as other types of housing are; however, one observable difference is that
tenant turnover, vacancy rates, rent loss, and collection costs are higher in this type of housing.---Many subsidized housing projects were built for tax credits for the owners as a result there are many absentee owners.
The famous Superfund Law was so named because
two trust funds were created to finance clean-up projects and pay claims---
The Revenue Reconciliation Act of 1993 modified the 1986 passive loss restrictions by allowing individuals who materially participate in rental real estate to deduct rental losses from other income. To qualify, how much time must a person devote to personal services to real property trades or business during a tax year?
0.5---Changes in government policies can cause random changes in real estate activity on a nationwide scale.
When a property manager is negotiating a renewal of a lease, the terms, conditions, and any concessions may be influenced by many factors. What will exert the strongest influence over the terms and conditions of the new lease?
Market conditions at the time of expiration of the present lease---The manager would consider what the competition is offering.
Which of the following ranks highest among building management and design problems?
Air quality---New sources such as factories and power plants must install the most effective technology available to reduce air pollution.
Which of the following can assist a manager with developing a stable tenant population?
All of these---All of these would help retain existing tenants.
What is the major type of advertising used to rent apartments and single-family homes?
Classified ads---Classified ads are the most effective way to advertise residential.
What type of relationship do colleges, large corporations, and private institutions that require the services of a property manager for their properties prefer?
Employer-employee relationship---These special purpose properties would hire an internal person with the expertise in their specific field.
Along with knowledge, experience, and expertise, the property manager must have which of the following personal characteristics?
Honesty and integrity---Honesty and integrity to do the right thing
The property manager has just taken over a new property. What is the point of reading all of the leases?
Identify the amount and durability of the rental income---The manager would figure how sustainable the rental income would be.
What organization awards the designation Certified Property Manager (CPM)?
Institute of Real Estate Management (IREM)---IREM offers opportunities for property managers to share ideas and programs to instruct those coming into the business. They are an affiliate group of NAR
Which of the following forms of advertising is available to prospects 24/7 regardless of their location?
Internet websites---Prospects may pull up a website at will 24/7
Which of the following BEST defines real property?
Land, including its subsurface and airspace above and all improvements---Land from subsurface rights (oil, gas, mineral) to air rights above plus all man made improvements (buildings, streets, sewers) equals real property
Which of the following is a deterrent for criminal and gang activity?
Lighted walkways---Well lit areas will deter crime
Which of the following will be located in the permanent file?
Management agreement and mortgage information---The permanent file will include management contract and title information, labor contracts and legal description.
Which Sunshine Apartments rental policy is considered legal under the Fair Housing Act of 1968?
Rentals are refused to prospects who have long hair and ride motorcycles.---Long haired motorcycle riders are not a protected class.
Of the following, which generally offers a marginal financial return for management?
Single family housing---This would be a small job compared to a complex with many units
Which of the following should be consulted first before making any investment into new technology?
Software program---A software program should be user friendly and address all of the data needs of operations
A couple is renting an apartment from an owner while their house is being built. The couple's lease is about to expire but the owner has agreed to allow them to remain in the apartment on a month-to-month basis until their house is completed. What type of estate will the couple have?
Tenancy at will---A tenancy at will has no specific end date. The end of the tenancy often is based on an event happening completion of the house...
When renting residential property, a manager
may want to obtain individual credit reports---Finance terms are not discriminatory and may show the responsibility of the tenant.
Individual commercial offices are generally cleaned by
night janitors.---After business hours.
The clause that gives a landlord the right to recover any space that a tenant is unable to occupy or sublease is the
recapture provision---This would be part of an assignment or subletting lease.
The purpose of the Clean Air Act is to
regulate the emission of toxic air pollutants---The act is to combat air pollution
To properly identify the subject property in a management contract, all of the following are correct EXCEPT
the full legal description is always required---The management contract must simply identify the property.
The demand for professional property management around the end of the nineteenth century resulted primarily from
the invention of the high-speed elevator---Also steel framed buildings, development of suburban areas and investment opportunities.
One of the MOST important considerations in selecting commercial tenants is
their compatibility with the other tenants---Gender race and religion are protected classes
Often, the only maintenance provided by industrial property management is
upkeep of grounds and exterior of the building.---In a net lease the tenant would assume some or all of the maintenance responsibility of the property.
The MOST effective way for a property manager to find prospective tenants for a shopping center would be through
personal contact.---The manager should build a file of prospects making cold calls on merchants in the area.
A property manager initiated a program of regularly scheduled maintenance activities where both the interior and exterior of the premises, including all the equipment and grounds, are regularly inspected. Such a program is called
preventive maintenance.---The purpose of preventive maintenance is to preserve the physical integrity of the property.
The owners of an apartment complex have given specific instructions to their rental manager to NOT rent to Hispanics or African Americans. Who is liable?
Both the manager and owners are liable.---If both are involved, both are liable
Which of the following is a major part of a neighborhood analysis?
Boundaries and land use---Also included would be building codes, transportation, utilities, economy, supply and demand, amenities and facilities
What financial report tells the owner the sources of income and expenses, net operating income, and net cash flow?
Cash flow report---The report shows NOI minus disbursements and the amount remitted to the owner.
What form of lease is generally utilized for industrial properties?
Net lease---The tenant would pay rent plus certain expenses incurred in the operation of the property.
The manger is responsible for a property on which there are several underground storage tanks that store fuel oil. What kind of insurance is required by law?
Pollution liability insurance---This insurance is required for underground storage tanks of hazardous waste.
The definition of a hazardous waste is
a byproduct of a manufactured item which, itself, may not be subject to environmental law or regulation.---
An advertising brochure will be MOST effective if
all of the above---With a theme and good appearance, it will leave a lasting impression. Easy to comprehend will appeal to a larger audience.
Large stores that bring in customers who may also shop at the smaller stores are called
anchor tenants---The large stores bring in the customers to the area. The smaller stores benefit from the draw.
Owners and managers of older residential rental properties must
avoid chipping and peeling paint---Construction prior to 1978 must provide a disclosure statement describing the potential hazard of lead paint.
Industries that rely on a large consumer population and are sensitive to growth trends or shifts in the marketplace are called
market-oriented industries.---These industries locate near industrial users and consumers of its products.
Small, secure storage units rented to individuals and small businesses are popularly known as
ministorage.---
A long-term lease requires $400 for the first two years, $500 during the third year, and a $600 for the last two years. This lease contains a(n)
step-up clause---The lease would include agreed upon rent increases at specific intervals.
Subsidized housing managers realize that
subsidized housing developments need professional ongoing management.---Subsidized housing is funded with many types of federal funding with specific rules and regulations that require great detail to stay in compliance.
When there are more units available than tenants, it is referred to as
technical oversupply---Available rent space exceeds tenant demand.
Courts have interpreted liability to be strict, joint and several for the responsibility of creating environmental hazards. Joint and several liability means
all persons as a group and individually have responsibility for the entire loss.---
One of the MOST important things for a manager to keep in mind while preparing an operating budget is to
be conservative in all forecasts---An operating budget is a projection of income and expense for the operation of the property over one year. Being conservative would pad the report for any unexpected problems in the future.
After a hurricane or an earthquake, the role of the property manager often becomes
claims adjuster---In the event of a disaster, the manager will be responsible to negotiate with the insurance company to obtain a fair settlement.
A benefit that a professional property manager can offer multiple-owner occupied projects includes
decentralized authority and responsibility for operations of the property.---The property manager can help identify and reach the owner's goals
The manager of a large commercial building became preoccupied with paperwork and did not inspect the premises as he should have, which resulted in lots of wear and tear from the tenants. The loss of value due to postponing repairs is called
deferred maintenance---Deferred maintenance is the physical depreciation in value due to postponed maintenance of the building.
A major contributing factor to the decline of centralized commercial districts was the
development of suburban areas.---With the expansion of transportation the population shifted to the suburbs. As a result suburban shopping centers were built away from the city.
The tenant's remodeling or renovation plans should be viewed by the building's management in order to
ensure that they meet current life safety, fire, and security provisions.---The plans are reviewed to ensure the physical safety of the tenants.
An estate owned by the tenant that continues for a specified period of time is called
estate for years---An estate for years must have a definite termination date. The estate does not have to be for years. A six month lease is an estate for years.
If the owner of a condominium does NOT make mortgage payments, the
financing for the entire property would not be endangered---Only the unit that is delinquent on payment would be affected.
If conditions indicate a rental increase, the manager should
maintain or increase the current level of services---The manager will make an effort to retain existing tenants.
A newer field of property management involves working with individual, inexpensive home ownership and homesite rental in
manufactured home parks---Manufactured home parks are an expanding form of residential living.
In a property analysis, major vertical penetrations of the floor, such as utility shafts, stairwells, and elevators are excluded in the
dominant portion---The dominant portion is the inside finished surface of the outer building wall
When comparing different forms of advertising, the property manager should realize that
direct mail is favored by industrial and commercial property owners---Industrial and commercial property owners and managers can compile a list of potential tenants making direct mail a cost effective method of advertising.
When qualifying a prospective tenant of an industrial property, the MOST important inquiry the property manager should make is
exact zoning status required by the prospect.---The utility of the building and the correct zoning to allow the use the tenant needs.
In managing today's office buildings, the person who handles a team of specialists (architects, designers, engineers, communications specialists, and others) is called a(n)
facility manager---The facility manager manages a team of specialists for furnishing and maintaining leased space.
All the correspondence from tenants should be kept in a
general correspondence file.---This file will contain all communication with the tenants.
A property manager may deny a lease to someone because the individual
has insufficient income---Financing problems are not discriminatory
Managers must make a lead-based paint disclosure when the property they manage was built before
1978---
Generally, state laws require which of the following to obtain a real estate license?
An agent of a company managing property for several owners---The other three choices are exempt.
Housing prices have greatly increased in some parts of the country. What are the consequences if people cannot afford to buy their housing?
Greater demand for rental properties---This would cause many to not qualify for financing creating the need to rent.
What is the final step when completing a management plan?
Identify and analyze the owner's goals---The manager would analyze the data and verify if it will support the owner's goals.
The 55 to 65 age group tends to sell their larger homes and move into a(n)
active, resort-oriented community---Many amenities are offered in these communities.
One of the BEST ways to establish a good tenant relationship would be to
have a joint inspection of the premises prior to the tenant moving in.---The inspection would be a way for both parties to address any concerns up front.
In a marketing analysis, the specific goal of a property manager is to identify major economic trends and the
effect on the value of the specific property at the manager's particular market level---A market analysis incorporates information about the region and local area where the property is located.
When a property manager acts as the prime or general contractor, the property manager
must possess some knowledge of construction to supervise different trades---The manager would need similar knowledge to a general contractor to efficiently supervise different jobs
In order to ensure continuity from store to store and to control expenses, many national franchising retail chains prefer
net leases---The tenant would pay part or all of the expenses.
The retail property manager's administrative responsibilities are governed by the
owner's objectives---The management agreement would detail the manager's responsibilities to support the owner's goals.
When disbursements exceed receipts for a certain month, usually the manager can
pay costs from reserve funds previously established---Reserve funds are monies set aside for expenditures not covered by insurance.
A tenant is required to pay additional amounts to the landlord only if and when the business volume justifies an increase. This tenant MOST likely has a
percentage lease---Retail uses a percentage lease. The tenant would pay base rent plus a percentage of gross sales.
A shopping center from 300,000 square feet to an excess of 1 million square feet that consists mostly of large national chain stores is called a
power center.---These national chain stores would be considered anchors in a conventional shopping center.
Two principal categories of commercial real estate are office property and
retail property---Both are income producing properties. Warehouse properties would be part of industrial.
Increasing the insurance deductible is an example of
retaining the risk.---The manager would retain more liability
Signage in a shopping center
serves as an advertising medium for tenants.---The marquee can be seen from the road and parking lot.
When professional property managers are negotiating contracts
their primary goal is a signed lease beneficial to both parties---Securing a quality tenant will support the owner's goals.
When working with outside brokers in marketing space, the property manager may expect
to share a portion of the leasing fee---There would commonly be a split negotiated.